Age Scotland’s Campaigns and Communications Manager, Lindsay Scott, discusses the flaws in means testing for older people in Scotland.
The recent suggestion in the Scotsman by Robert Wright, professor of economics at the University of Strathclyde, that means testing be introduced to ease the increasing costs of universal services such as free personal care and concessionary transport for older people has one major flaw.
Means testing is generally based on a person’s income, though sometimes it also includes tests of assets and/or capital. And although means testing can concentrate resources on those most in need and to some extent redistribute those vertically from rich to poor, numerous cost-benefit analyses have revealed that its advantages are often outweighed by its disadvantages.
These disadvantages are: it is usually complex and problematic to administer, and often fails to help those most in need.
The reasons commonly given for low take-up are the fear of penalty for error; the unpleasantness of the claim process; a lack of information giving rise to information search costs; an unwillingness to divulge personal financial circumstances, the perceived loss of self-respect; social stigmatisation, the effect of changing circumstances and the less than satisfactory history of means-testing to date.
Furthermore, because people’s income can change rapidly (interest on savings plummeting for example), effective means-testing involves constant reporting and frequent adjustment of the levels.
Because this is time-consuming, a large bureaucracy is usually required and as a result, the costs of administering the means-testing procedure can end up negating any potential benefits to the public purse.
There are a number of options that can be explored to ensure the sustainability of these valuable, and greatly appreciated policies – means testing should be the option of last resort.
What do you think of Robert Wright’s suggestion? Read the full Scotsman article here.